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Names, shares and mortgages : The formalisation of Swedish commercial bank lending, 1870-1938

Broberg, Oskar and Ögren, Anders LU (2019) In Financial History Review 26(1). p.81-108
Abstract

This article explores the process of the formalisation of the Swedish financial market, through an analysis of commercial bank lending in the late nineteenth and early twentieth century. The analysis shows that the incorporation of Swedish business around the turn of the century led to a shift from lending primarily backed by name security to an increased use of mortgage and shares as collateral - after the severe stock market crash in 1920/1 mortgage lending surpassed lending against shares as collateral. We interpret this change as an important part of the formalisation process of the financial system, as it standardised the valuation process and allowed creditors to exit on a secondary market. Our statistical testing points to... (More)

This article explores the process of the formalisation of the Swedish financial market, through an analysis of commercial bank lending in the late nineteenth and early twentieth century. The analysis shows that the incorporation of Swedish business around the turn of the century led to a shift from lending primarily backed by name security to an increased use of mortgage and shares as collateral - after the severe stock market crash in 1920/1 mortgage lending surpassed lending against shares as collateral. We interpret this change as an important part of the formalisation process of the financial system, as it standardised the valuation process and allowed creditors to exit on a secondary market. Our statistical testing points to increased financial wealth and liquidity represented by the broad money supply, plus population growth and urbanisation, as important forces behind this formalisation.

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author
and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
banking, collateral, credit creation, financial revolution, industry, urbanisation
in
Financial History Review
volume
26
issue
1
pages
81 - 108
publisher
Cambridge University Press
external identifiers
  • scopus:85063053300
ISSN
0968-5650
DOI
10.1017/S0968565019000015
language
English
LU publication?
yes
id
b09f58cf-2e73-4cd6-a1fb-aeed98468f1a
date added to LUP
2019-03-29 09:51:25
date last changed
2020-10-07 06:22:52
@article{b09f58cf-2e73-4cd6-a1fb-aeed98468f1a,
  abstract     = {<p>This article explores the process of the formalisation of the Swedish financial market, through an analysis of commercial bank lending in the late nineteenth and early twentieth century. The analysis shows that the incorporation of Swedish business around the turn of the century led to a shift from lending primarily backed by name security to an increased use of mortgage and shares as collateral - after the severe stock market crash in 1920/1 mortgage lending surpassed lending against shares as collateral. We interpret this change as an important part of the formalisation process of the financial system, as it standardised the valuation process and allowed creditors to exit on a secondary market. Our statistical testing points to increased financial wealth and liquidity represented by the broad money supply, plus population growth and urbanisation, as important forces behind this formalisation.</p>},
  author       = {Broberg, Oskar and Ögren, Anders},
  issn         = {0968-5650},
  language     = {eng},
  month        = {03},
  number       = {1},
  pages        = {81--108},
  publisher    = {Cambridge University Press},
  series       = {Financial History Review},
  title        = {Names, shares and mortgages : The formalisation of Swedish commercial bank lending, 1870-1938},
  url          = {http://dx.doi.org/10.1017/S0968565019000015},
  doi          = {10.1017/S0968565019000015},
  volume       = {26},
  year         = {2019},
}